SBA Loan Default: Please Stop Believing Your Franchisor's Projected Numbers, Do Your Own Due Dilligence

If you are considering a franchise opportunity, do NOT rely on their projected numbers as to what your sales revenue and therefore profitability will look like. I see far too many franchise operators who invested all they have into a huge commitment only to find out the projections were meaningless, and the business model blows up.

I see comps based on much different situations regarding location and population density, I see pure exaggeration; I see every manner of fabrication or irrelevant comparison that people seem to be willing to invest their life savings on and take out personally guaranteed loans that will tank them completely when the franchise fails. If only you did your own due diligence and stop believing the self serving fiction so many franchise businesses provide.

If you are opening a small town franchise, why would you accept as a model an inner city franchisees numbers, they are not good comps? Why not call a few franchisees and see what is really happening, ones similar in profile to the one you would be purchasing?

You cannot simply believe the numbers provided and invest your life savings on such say-so. It makes no sense and I see so many upside-down franchises because they relied on such projections that were extremely unlikely to come true.

Further, I see many franchisees that have little or no support, little or no advertising in their market, as promised all of which could have been verified if one talked to enough other franchisees and get real experience not promises from the franchisor.

It is your cash, your debt, due your own diligence...be realistic and check out real comps, do not rely on the franchisors' projections, they are too self serving and unlikely to be realized. I see it way to often...when it is too late.